How Soon Will Verizon Need More Spectrum?

Verizon Communications continues to argue that it has no particular need for additional spectrum. Some think Verizon is going to need more spectrum in a few years, though.

Analysts at New Street Research estimate that Verizon will run out of capacity in the next two to three years, even if it re-farms all 2G and 3G spectrum, if consumption continues to grow at present rates.

"Densification may delay the crunch by a year or two, but sooner or later the company will need more spectrum," said analysts Jonathan Chaplin, Spencer Kurn and Vivek Stalam.

Macquarie Capital analysts Kevin Smithen and Will Clayton said they are even more convinced now that Verizon "will have network congestion issues on LTE over the next couple of years."

Media consumption, particularly over the top streaming video, is among the chief reasons for the concern, given the bandwidth intensity video represents.  

Sponsored data plans that exempt entertainment video from usage buckets will be among the important new consumption drivers, and ironically could create even more demand than would be the case if entertainment video.

source: Barron's